The Tax Side of a Patent: Türkiye’s IP Income Exemption

A patent is usually budgeted as a protection cost. It also has a tax dimension: Article 5/B of the Turkish Corporate Tax Code exempts 50% of qualifying income attributable to inventions that meet its conditions. For a manufacturer, that can dwarf the cost of filing.

Which income qualifies

• Income from licensing the invention.
• Gains from assigning or selling it.
• The portion of profit from products manufactured in Türkiye using the invention that is attributable to the patented or utility-model-protected invention.

The third limb is the one most often missed: even without licensing or selling, a manufacturer can benefit for the share of product profit attributable to the invention. Determining that share is a valuation exercise to be run with your tax advisers.

The core condition

The invention must be protected by a patent or utility model certificate, and the underlying R&D, innovation or software activity must have been carried out in Türkiye. The type of examination the patent went through matters, so a route chosen purely for speed can cost the tax benefit later. Plan the filing strategy and the tax position together.

See the difference between the two rights in our patent vs utility model article.

VAT

Alongside the corporate tax exemption, Turkish law provides a VAT exemption for the licensing, assignment or sale of intangible rights arising from R&D carried out in Türkiye and protected by a patent or utility model certificate. Licence and assignment agreements should be structured with this in mind.

We plan protection strategy alongside its tax consequences — get in touch.

General information only, not tax advice. Availability and reporting requirements must be assessed with your tax adviser under the legislation in force.